Returns and expired products are unavoidable costs that affect your margin. Many entrepreneurs forget to include these 'invisible' costs in their food cost calculation, making them think they're profitable when they're actually losing money. In this article, you'll learn how to correctly account for these costs in your food cost.
What are returns and expired products?
Returns and expired products are ingredients you've purchased but can't sell:
- Expired products: Food that's past its expiration date
- Spoiled products: Vegetables that wilt, meat that discolors
- Returns: Products you send back to your supplier
- Damaged goods: Broken packaging, damaged in transit
These costs are normal in any kitchen, but they need to be included in your calculations.
Why this affects your food cost
If you buy €100 worth of vegetables but throw away €15 of them, you've actually paid €100 for €85 worth of usable ingredients. Your real purchase price is higher than you think.
💡 Example:
You buy €200 worth of fresh fish this week:
- Usable for dishes: €170
- Expired due to poor planning: €20
- Damaged on delivery: €10
Your actual costs: €200 for €170 worth of usable fish
Actual price: €200 ÷ €170 = 1.18× more expensive than expected
How do you calculate your loss percentage?
The loss percentage shows what percentage of your purchases you throw away or return:
Loss percentage = (Loss in euros ÷ Total purchases) × 100
💡 Example calculation:
Purchases this month: €2,500
- Expired vegetables: €80
- Spoiled meat: €45
- Returned products: €25
Total loss: €150
Loss percentage: (€150 ÷ €2,500) × 100 = 6%
Accounting for loss in your food cost
There are two ways to include loss in your food cost calculation:
Method 1: Add loss percentage
Add the loss percentage to your food cost. If you normally have 30% food cost and 5% loss, your actual food cost becomes 35%.
Method 2: Adjust purchase price
Increase your purchase prices by the loss percentage before you calculate your food cost.
💡 Example method 2:
Salmon costs €18/kg, you have 6% loss
Adjusted price: €18 ÷ (1 - 0.06) = €18 ÷ 0.94 = €19.15/kg
Calculate with €19.15/kg in your recipes
Typical loss percentages per product
Different products have different loss risks:
- Fresh fish: 8-15% (spoils quickly)
- Leafy greens: 10-20% (wilt, outer leaves)
- Meat: 3-8% (lasts longer, but expensive when lost)
- Dairy: 2-5% (clear expiration date)
- Fruit: 15-25% (seasonal, spoils quickly)
- Dry goods: 1-3% (long shelf life)
⚠️ Note:
These percentages are guidelines. Your own loss can be higher or lower depending on your purchasing, storage, and planning.
Minimizing loss
While loss is unavoidable, you can limit it:
- Better planning: Don't buy more than you can use
- FIFO principle: First In, First Out - use oldest products first
- Proper storage: Good refrigeration and ventilation
- Daily checks: Check daily what's about to expire
- Flexible menus: Daily specials to use up excess ingredients
Recording loss
Keep track of what you throw away and why. This helps you identify patterns and reduce loss:
- Date of loss
- Product and quantity
- Reason (expired, spoiled, damaged)
- Value in euros
With a system like KitchenNmbrs you can track this digitally and automatically calculate your loss percentages per product category.
How do you account for loss in your food cost? (step by step)
Record all your loss over the course of a month
Keep precise track of what you throw away: product, quantity, date, and reason. Also note the purchase value of these products. This gives you a realistic picture of your actual loss.
Calculate your loss percentage per product category
Divide your total loss by your total purchases and multiply by 100. Do this separately for meat, fish, vegetables, and dairy, because each has a different loss percentage.
Increase your purchase prices by the loss percentage
Divide your purchase price by (1 - loss percentage). With 6% loss on €18/kg salmon this becomes €18 ÷ 0.94 = €19.15/kg. Use this adjusted price in your recipes.
✨ Pro tip
Start by tracking loss for your 5 most expensive ingredients. That's where the biggest financial risk is and where you can save the most.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Do I need to account for loss if I throw away very little?
Yes, even 2-3% loss adds up over a whole year. It seems small, but on an annual turnover of €300,000, 3% loss is €9,000 that you haven't accounted for in your food cost.
Can I deduct returns from my loss percentage?
Only if your supplier refunds you. Products you return but don't get reimbursed for are just loss. Always check your credit notes.
How often should I update my loss percentage?
Check it every 3 months. In summer you often have more loss due to heat, in winter less. Adjust your food costs if the loss deviates by more than 1%.
What if my loss is higher than the averages?
Then you need to look at why. Is it poor planning, incorrect storage, or too much purchasing? Fix the cause and include the higher loss in your food cost.
Do I need to account for beverage loss too?
Yes, bottles that break or beer that expires is also loss. Beverages usually have less loss (1-3%) but with expensive wines this can add up quickly.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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